Updated from 7:50 a.m. EDTTheStreet.com ( TSCM) posted a $3.2 million profit in the second quarter as strong gains in advertising and subscriptions drove a 60% year-over-year revenue improvement. The company, which publishes this Web site and provides online financial commentary, analysis and news, earned 12 cents a share in the quarter. In the year-ago second quarter, TheStreet.com lost $2.3 million, or 9 cents a share, including a loss of $3.9 million, or 15 cents a share, from discontinued operations. On a continuing-operations basis, earnings rose 94% in the latest quarter from a year ago. Revenue in the second quarter of 2006 totaled $12.4 million, up from $7.8 million a year ago. TheStreet.com's subscription revenue rose 57% from a year ago to $8.4 million. The number of paid subscribers to the company's premium services increased by about 3,800, or 4%, from April through June. Subscription bookings were $9.2 million, up 39% from a year ago but down 9% from the first quarter. Advertising revenue rose 76% to $3.7 million, reflecting a 98% year-over-year rise in Internet page views during the quarter. Compared with the first quarter, advertising revenue increased 14% and page views declined 3%. The company's Web sites had 4.4 million unique visitors in the quarter, up 57% from a year ago and down 3% from the first quarter. "Our strategy has been to grow both sides of our business -- advertising and subscriptions -- so that each one would be a strong revenue driver for the company," said Thomas J. Clarke, Jr., chairman and chief executive. "It is rewarding to see the success of each revenue stream reflected in our second-quarter results." Despite the better-than-expected results, shares of TheStreet.com were recently down 63 cents, or 5.8%, to $10.30. Investors may be leery that growth in the second quarter was not as robust as in the previous quarter. The number of page views, unique visitors to the Web site and advertising bookings decreased slightly from the first quarter.
On a conference call with analysts, Clarke said the large year-over-year gains posted in each of those metrics were a better reflection of the company's performance. He also said the company's video offerings could be a major driver in new advertising growth this year. TheStreet.com recently hired Farnoosh Torabi, formerly of New York 1 News, as the company's first full-time video correspondent. While Clarke estimated that revenue from video content currently makes up just 4% or 5% of the company's total advertising revenue, he said that figure is poised to grow. "We're in our video infancy now, but we're hearing strong demand from our advertisers for more video content," Clarke said. "We see this as being a large component of our growth in advertising." Currently, 40% of TheStreet.com's advertising revenue comes from nonfinancial advertising, but the company sees room to further penetrate the mainstream advertising market as its audience grows. On the subscription side of the business, Clarke said the sideways movement in the overall stock market doesn't bode well for increasing sales, but a move up or down could drive more demand for the company's products as investors look for more information to understand what is going on in the financial world. TheStreet.com generated $6 million in cash flow in the latest quarter, up from $1 million a year ago. Deferred revenue was $13.2 million, up 45% from a year ago. The company ended the quarter with $45.9 million of cash and equivalents, up 55% from a year ago. Operating expenses jumped 54% to $9.6 million.